Ten rules for startups

Last week, entrepreneur Mark Cuban wrote a column for Inc. magazine on the 12 "rules" for startups.

It is worth reading because it contains some insightful and, not surprisingly, entertaining ideas from Mr. Cuban, who owns the Dallas Mavericks basketball team, Magnolia Pictures and Landmark Theatres, and is one of the most colourful and outspoken entrepreneurs.

In keeping with the spirit of things, here are my 10 "rules" for startups.

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1. You must have passion

Startups are hard work, involve a lot of tough slogging and problem-solving, and often consist of two steps forward and one step back. To create a startup, passion is a must-have characteristic to deal with the constant ups and downs.

2. You must be persistent

Successful startup entrepreneurs have a never-give-up attitude. When times are particularly challenging or no one believes in their idea or the prospects for their business, persistence helps startup entrepreneurs continue to fight the good fight.

3. You must have a compelling product

You can put together the most effective messaging and the slickest marketing campaigns but, if the product sucks, it really doesn't matter. Eventually, people will see through the marketing rhetoric and the slick presentation to discover your product isn't that compelling.

4. You must be resourceful

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Since it can be a real challenge to get capital to start and grow a business, entrepreneurs need the ability to get things done in as cost-effective way as possible. They need to make deals, forge alliances, leverage networks and bargain hard to give their business as much traction as possible.

5. Hire the right people

For a startup with a limited amount of resources, a bad hire can come at a huge cost. As much as startups want to move quickly and aggressively, they also need to take the time to make good hiring decisions.

6. Know when to cut someone loose

Related to the point above, a startup entrepreneur also needs to know when an employees isn't working out to stem the bleeding as soon as possible.

7. Don't get too carried away by the highs or the lows

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Startups are volatile animals. One day, you can be on top of the world; the next, you're bottoming out. Startups need to learn to stay the course, stick to the plan, and keep moving forward. It doesn't mean they shouldn't celebrate their successes but the highs should be kept in perspective.

8. Understand that raising money is time-consuming and disruptive

From the outside looking in, raising venture capital looks sexy and exciting. The reality is that it involves a lot of grunt work, energy, numerous meetings and lots of patience to convince investors to commit. It also takes entrepreneurs away from running the business.

9. Recognize that once you raise money, it and your investors need to be managed

When investors decide to give startups money, they expect progress, traction and regular updates on what is happening. It's not like they hand over the cash and then go away while the entrepreneur gets to do what he or she wants. Instead, startups need to continually manage their investors, which takes time and effort.

10. Enjoy the work because startups can be a 7/24 activity

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Startups are not a 9-to-5 job that lets you go home at the end of the day without any work distractions. Startups are beasts that can be consuming so you had better enjoy the journey.

Special to The Globe and Mail

Mark Evans is the principal with ME Consulting, a communications and marketing strategic consultancy that works with startups and fast-growing companies to create compelling and effective messaging to drive their sales and marketing activities. Mark has worked with four startups – Blanketware, b5Media, PlanetEye and Sysomos. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshmarketing and meshwest conferences.

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